The current high price of gas has led to a lot of crazy proposals from gas taxA gas tax is commonly used to describe the variety of taxes levied on gasoline at both the federal and state levels, to provide funds for highway repair and maintenance, as well as for other government infrastructure projects. These taxes are levied in a few ways, including per-gallon excise taxes, excise taxes imposed on wholesalers, and general sales taxes that apply to the purchase of gasoline. holidays to creating a tax deductionA tax deduction is a provision that reduces taxable income. A standard deduction is a single deduction at a fixed amount. Itemized deductions are popular among higher-income taxpayers who often have significant deductible expenses, such as state/local taxes paid, mortgage interest, and charitable contributions. based upon energy consumption. But Rep. Paul Kanjorski’s (D-PA) may top them all in terms of its stupidity. From the Times Leader, Kanjorski’s plan would do the following:
• H.R. 5800 would taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. industries’ windfall profits.
• The bill would set up a Reasonable Profits Board to determine when these companies’ profits are in excess, and then tax them on those windfall profits.
• As oil and gas companies’ windfall profits increase, so would the tax rate for those companies.
• Kanjorski said his legislation will encourage oil companies to lower prices to prevent them from receiving higher tax rates.
While Hillary Clinton may have failed ECON 101 along with John McCain, it appears as if Kanjorski may been enrolled in Marxism 450 at the time. In all honesty, nationalization of the oil industry (i.e. Venezuela) may be better than Kanjorski’s ridiculous proposal.
One can make a case for taxing that portion of the return to capital that comes from economic rents, but Kanjorski has probably never even heard the term. An economist who backed such a tax would understand that such a tax is not going to lead to lower prices at the pump, just as economists are setting the record straight on the current gas tax holiday gimmick. Furthermore, the justification for taxing economic rents would apply to all sectors, not just petroleum.
Members of Congress and the American public need to understand that no tax cut or tax hike in the short-term is going to lower the prices at the pump. And any tax hike is going to raise prices in the long-term. Raising taxes on energy is not all bad, however. While any tax hike has its costs, raising taxes on gasoline does lead to less pollution (indirectly whereas a carbon taxA carbon tax is levied on the carbon content of fossil fuels. The term can also refer to taxing other types of greenhouse gas emissions, such as methane. A carbon tax puts a price on those emissions to encourage consumers, businesses, and governments to produce less of them. is more direct) and greater funds for transportation (assuming they are spent in the right way which is unfortunately not always a safe assumption).Share